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November 8, 2006

Over the past few years, cable companies have been battling ESPN over the cost of carrying the ESPN channel. It’s long been part of the “standard” cable offerings, but ESPN, knowing their status as the “WorldWide Leader in Sports”, have steadily been raising their costs to the cable providers. It’s gotten to the point where cable providers have been threatening to make it a pay channel.

ESPN, though, rather than taking their foot off the throttle, have kept the pressure up. ESPN GamePlan was understandable, because they were offering pay content for games that wouldn’t normally ever be broadcast nationally. That works well for fans who have left their alma mater’s locale, like I have. For a cost of $99 per season, you can subscribe to ESPN GamePlan and get all the games you desire. But ESPN decided to take it to the next level. They created a new channel, ESPNU, which is dedicated to college sports. And they’ve used this to exert more pressure on cable providers.

You see, ESPN GamePlan games are often available through local affiliates. I have had situations where I’ve caught Purdue games on CSS (Comcast Sports South), which normally would have required a subscription to GamePlan. Those games are usually broadcast locally to the school on ESPN+ channels. But ESPNU is different. It’s a channel like ESPN or ESPN2, in that games broadcast on ESPNU are only available on ESPNU. And they want all cable providers to carry ESPNU. Many have chosen not to, at this point.

Games carried on ESPNU require me to head out to a sports bar to watch. It’s actually been a little tougher than normal, because one place I would normally go to watch games doesn’t even carry ESPNU. So it requires going to certain sports bars. Granted, since I’m a fan of Purdue, a mid-level Big Ten team, I understand that it’s going to be a little tough for me to always find my team on TV. But ESPN knows that if they really want to get cable providers signed up for ESPNU, they must piss off fans of bigger programs. So earlier this year, Ohio State played a conference game on ESPNU, much to the chagrin of Columbus residents. OSU fans seem to think it’s a god-given right to watch Buckeye football on basic cable. Last weekend, I believe (I could be mistaken) that the Michigan – Ball State game was on ESPNU. ESPN is trying very hard to use their “monopoly” power to ensure local cable providers will add ESPNU to their lineups.

I use the term “monopoly” in quotes for a reason. ESPN is the “WorldWide Leader in Sports” for a reason, and that’s because they’ve done it better and cheaper than anyone else for quite some time. But they’re not a state-enforced monopoly, they’re a natural monopoly. And they’re pissing off their customers. You know what the result of that will be? As I pointed out before the season started, the result will be the Big Ten Network. In a natural monopoly, competition will arise which forces the monopoly power to change its ways, or lose its monopoly status. The Big Ten Network is the first attempt at doing just that, offering the games not carried by ESPN, ESPN2, or a major network, and putting on its own channel that may carry less of a price tag than ESPNU.

This is a real-life example of the natural breakup of a natural monopoly. And I’m not going to guarantee it’s going to be a clean fight, and I’m not going to guarantee everything will come up roses. But I think it will work itself out, and it will do so without the power of government. Not that anyone will pick up on the lesson, but I feel like someone has to point it out.

5 Comments

[...] This post was originally posted at The Unrepentant Individual, where I’ve been posting about college football a lot lately. It drifted over into the territory of monopolies, so I thought I’d cross-post it here. [...]

Technically, it’s a “competitive monopoly”. A natural monopoly is something like utilities, in which it’s pretty much impossible for more than one provider to exist. A competitive monopoly is a free market in which there happens to be only one supplier.

Actually, it’s not a monopoly at all, as NBC, CBS, TBS, etc all broadcast games. But they’ve ESPN has enough market share (especially since they’re partnered or a part of ABC) to wield considerable monopoly power, they have many of the advantages of a monopoly.

Actually, not only was the Michigan/Ball State game on ESPNU, the Purdue/Michigan State was as well. It doesn’t take a conspiracy theorist to figure out they were putting the screws to cable providers in Michigan.